Wikirating, the open source rating agency

At the big three rating agencies that make the world tremble with their decisions has come up with an unexpected competitor: Wikirating, a platform of open source in which any user can evaluate a country or a company.

Like its Wikipedia model, Wikirating it bases all its power on the collective intelligence of its users: anyone can put a note of solvency or even develop new analysis methodologies. And more than 5.000 people have already participated.

"Wikirating is the first free, independent and transparent rating instrument on the Internet," says one of its two founders, 37-year-old Austrian mathematician Dorian Credé.

The non-profit project has been operating since last October, but its gestation began in May 2010, prompted by what Credé describes as the discredit of the agencies, which failed to give the highest score to "toxic" financial products and did not foresee the bankruptcy in 2008 of investment bank Lehmann Brothers.

So I thought, why not do something like Wikipedia that deals with ratings? This would avoid any influence from the economic and political world, because everyone could control its operation, which would also be open and transparent, "he explains.

After a thousand hours of work with his partner Erwan Salembier, the project has started and has about 150 registered users, but 5.000 have already participated in some way on the digital page, which has had 20.000 visits .

Credé assures that in Wikirating, control over the data used for evaluations has been strengthened, due to the complexity of the matter it deals with and so that there is no hint of manipulation.

For this mathematician, who works in a software company, the future decline of the three big agencies that control 95% of the market (Standard & Poor's (S&P), Moody's and Fitch) is beyond doubt. The question is how long that process will take.

“The power of agencies is because the markets still trust them, but less and less. When markets know there are alternatives, they will value them. And the ones that work best will be the ones they finally trust, ”he predicts.

A real alternative?

Credé does not hide that his ambition is for Wikirating to become a real alternative in the future, just as now Wikipedia is an unquestionable reality despite the fact that many laughed at the project in its early days.

Up to now there are two methods to put notes, from the matricula de honor ("AAA") to the suspension of payments ("D"). One is a simple vote and the other is based on a mathematical model with classic economic variables, such as state debt and economic growth, which is then adjusted with other values ​​such as the UN Human Development Index.

Chile's grade in this 'free' agency is A +, in contrast to the US, which has an approved (BBB-). In addition, two other more complex methods proposed by users are being weighed by the founders of Wikirating, whose main problem is the lack of time because they are also due to their jobs as salaried employees.

But if one of the methods is a vote, isn't that also an opaque formula for rating a country?

A method like voting. Credé argues, it can also provide information because, after all, «the market is made up of people who ultimately also act in a subjective and emotional way. Markets don't always react rationally. '

And above all, «they are only methods, we do not say that they are the correct ones. And everyone can assess why they work openly ", which is in contrast to large agencies, which" do not explain what their calculation formulas are because they are the secret of their business. "

Another surprise is that with the mathematical analysis model, called Wikirating Sovereign Index (SWI), the scores of industrial countries are considerably worse than those offered by classical agencies.

In Wikirating, the US barely has a pass (BBB-) while France has not only lost the triple A, but it is a junk bond (BB-), as well as Germany (BB +) and Spain (BB), which contrasts with the bright note from Chile (A +).

The explanation is that in the SWI, public debt has a determining negative weight compared to the other variables.

“The situation in the industrialized countries is that bad, especially if we take into account the existing debt levels. If money is left to someone, the debts are a fundamental aspect to evaluate if they can return that money, "he argues.

Source: 20minutos